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Uganda’s Inflation Falls As Food Prices Drop

by Jacquiline Nakandi
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By Umaru Kashaka

Uganda’s annual headline inflation reduced to 3.2% in April 2024 from 3.3% in the previous month, driven mainly by a stronger deflation in food crop prices.

“This implies that there was a bigger year on year decline in food crop prices in April 2024 when compared to the year-on-year price decline for food crops recorded the previous month,” the finance ministry report on the performance of the economy for April said.

“On the contrary, energy, fuel and utilities (EFU) and core inflation both increased,” the report, which was published on Tuesday (May 21).

Headline inflation refers to the rate at which prices of general goods and services in an economy change over a period of time, usually a year while core inflation is a subcomponent of headline inflation that excludes items subject to volatility in prices. 

Core inflation excludes EFU, food crops and related items.

On annual food crops and related items inflation, the report said food crop prices recorded a deflation of -2.4% in April 2024 from a deflation of -0.4% in the previous month.

“This implies that similar to the previous month, there was a general decline in prices of food crops and related items in April 2024 when compared to the same period a year back albeit at a stronger pace. Food crops like matooke, beans, peas, cassava, carrots, pumpkin, tomatoes and bananas all recorded more significant price declines during the month,” it said.

The report also said this was largely attributed to increased harvests as weather conditions remained favorable.

Core inflation increased to 3.5% in April 2024 from 3.4% the previous month due to an increase in the rate at which prices of some foods increased especially meats like chicken, offals, liver, sausages, fresh tilapia, nile perch, and silver fish (mukene).

Fresh tilapia, silver fish and chicken kroilers in particular recorded significant price increases of 15.6%, 28.8% and 7.7% in April compared to 5.8%, 6.9%, and 2.9% respectively in the previous month.

Annual EFU Inflation increased to 7.9% in April 2024 from 7.6% the previous month, which was largely attributed to a rise in prices for petrol, diesel, liquified gas as well as charcoal and electricity when compared to the same period a year back.

“The rise in electricity charges followed a decision by the Electricity Regulatory Authority to increase end user tariffs for the second quarter of 2024 on account of the depreciation of the Shilling against the dollar which increases the costs of power generation incurred in foreign currency,” the report added.

Inflation in EAC

The report also said except for Tanzania, there was a general slowdown in annual headline inflation across the East African Community (EAC) partner states for the year ending April 2024.

Annual headline inflation in Rwanda and Kenya declined from 0.6% and 5.7% in March 2024 to -0.5% and 5.0%, respectively in April 2024. 

Conversely, the annual headline inflation rate in Tanzania for the year ending April 2024 increased slightly to 3.1% from 3.0% in March 2024.

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